For  the  first  time  in  the  history  of  railroading  a program 
bringing  together  all  the  complex  elements  which  go  to  make 
up  the  railroad  situation  was  arranged  tinder  the  auspices 
of  the  Evansville  ( Indiana ) Chamber  of  Commerce,  to  take 
place  in  that  city  on  December  14  and  15.  Railroad  presi- 
dents, leaders  of  railway  labor  unions,  members  of  com- 
missions which  regulate  the  railroads,  counsels  for  railroads, 
shippers  and  representatives  of  the  great  army  of  investors 
in  railroad  stocks  and  bonds  were  present. 

Among  those  on  the  program  to  make  formal  addresses 
were  Alfred  P.  Thom,  Counsel  of  the  Railway  Executives 
Advisory  Committee  on  Federal  Legislation;  Mr.  Frank 
Trumbull,  Chairman  of  the  Railroad  Executives  Advisory 
Committee ; Frank  P.  Walsh,  Chairman  of  the  Federal 
Commission  on  Industrial  Relations;  Clifford  Thorne,  Chair- 
man of  the  Board  of  the  Railway  Commissioners  of  Iowa; 
IV.  G.  Lee,  President  of  the  Brotherhood  of  Railway 
Trainmen. 


Any  discussion  on  the  subject  of  rail  and  water  trans- 
portation or  any  sound  analysis  of  the  present  condition 
of  American  transportation  cannot  be  complete,  cannot 
secure  effective  remedies  without  the  participation  of  the 
real  owners  of  the  railroads — the  investors. 

Quietly,  but  with  a steadiness  which  has  accomplished 
marvelous  results,  there  has  been  going  on,  for  the  past 
ten  years,  with  cumulative  force,  the  persistent  absorp- 
tion of  railway  stocks  and  bonds  of  the  leading  railway 
systems  of  the  country  by  the  man  of  moderate  means, 
the  small  investor. 

Starting  with  the  1907  panic,  known  in  Wall  Street  as 
the  “Rich  Man’s  Panic,”  there  has  been  a steady  and 
rapid  increase  in  the  individual  number  and  amount  of 
securities  held.  The  result  has  been  that,  whereas  in 
1901  many  leading  railroads  were  owned  by  a few  hun- 
dred or  at  most  thousands  of  investors,  now  men  (and 
women  too)  with  moderate  amounts  of  money  who  were 
impressed  with  the  opportunity  to  secure  liberal  and  per- 
manent income  are  the  chief  owners.  Coincident  with 
the  opportunity,  there  developed,  among  financial 
houses,  firms  specializing  in  service  to  the  small  investor, 
firms  which  studied  his  needs,  catered  to  his  wants,  se- 
lected with  care  the  security  desired,  whether  a single 
share  of  stock  or  a single  hundred  dollar  bond.  And  what 
is  now  the  result?  Listen  to  this  short  array  of  official 
figures  as  to  number  of  Stockholders  given  out  by  the 
larger  railroad  systems: 


Atchison 1901,  1,300  today,  45,000 

Pennsylvania 1901,  27,000  today,  94,000 

C.,  M.  & St.  P 1901,  5,000  today,  17,000 

Gt.  Northern 1901,  1,700  today,  25,000 

Baltimore  & Ohio 1901,  3,200  today,  27,000 

Southern  Pacific 1901,  1,500  today,  33,000 


and  so  on  down  the  list. 

The  New  Wall  Street 

And  let  me  state  right  here  a word  for  Wall  Street.  I 
have  a right  to  say  it,  because,  first,  I am  a railroad  man 
of  extensive  western  traffic  experience,  and,  second,  be- 
cause today  and  for  the  past  twenty  years,  I have  had 
practical  experience  in  Wall  Street  with  the  hydra-headed 
and  hard-headed  small  investor.  Wall  Street  has  changed 
very  much  during  the  past  ten  years.  Many  houses  now 
have  thousands  of  customers,  where  houses  doing  a larger 
business  have  only  hundreds.  This  is  due  to  the  immense 
detail,  the  careful  painstaking  work  required,  to  meet  the 
needs  of  the  small  investor.  Wall  Street  is  no  longer  a 

3 


gambler’s  paradise.  It  is  a section  of  hard  work,  devoted 
to  research  to  obtain  facts  and  information  to  guide  the 
thrifty,  how  and  what  to  buy.  It  is  to  Wall  Street  earnest 
minded  people  come  with  their  savings  to  buy  in  small 
quantities  securities  representing  the  best  lines  of  trans- 
portation in  the  country. 

During  this  period  of  increasing  popular  participation 
in  investment,  I have  been  actively  interested  in  the 
work  and  I know  whereof  I speak,  but  my  experience  pre- 
viously was  distinctly  in  the  railroad  field.  I think  I can 
present  evidence  entitling  me  to  membership  among  the 
railroad  men  who  helped  build  up  the  middle  and  far 
West. 

Some  Past  Experience 

I am  presenting  this  evidence  in  order  to  anticipate  the 
objection  which  we  are  all  likely  to  cite  when  another 
factor  intrudes  in  a discussion  which  we  have  come  to 
consider  limited  to  a certain  class  of  debaters.  So  please 
absolve  me  of  any  charge  of  egotism  when  I say  that 
forty  years  ago  I was  general  freight  agent  of  the  Kansas 
Pacific  Railway,  the  only  trunk  line  of  Kansas  running 
from  the  Missouri  River  to  the  Rocky  Mountains.  I saw 
Kansas  emerge  from  her  scourging  by  grasshoppers  and 
drought  to  a state  of  continuous  rich  crops  and  plenty. 
Thence  I went  to  the  great  Northwest  Pacific  coast, 
where  existed  a complicated  transportation  system  of 
river,  rail,  ocean  and  sound.  I transformed  the  measure- 
ment basis  of  transportation  charge  to  that  of  weight. 
The  rate  on  a horse,  fQr  instance,  was  reached  by  meas- 
uring from  the  tip  of  his  nose  to  the  end  of  his  tail  (we 
didn’t  allow  for  cropped  tails)  and  charged  on  the  basis 
of  40  cubic  feet  per  ton  of  space  occupied.  On  the  com- 
pletion of  the  Northern  Pacific  R.  R.,  I became  traffic 
manager  of  the  new  transcontinental  line,  which  revolu- 
tionized the  making  of  through  rates  to  the  Pacific  coast. 
All  of  that  great  development  I saw;  part  of  it  I was. 
Later,  thirty  years  ago,  I became  traffic  manager  of  the 
Chesapeake  & Ohio  R.  R.,  now  so  ably  represented  by 
our  friend,  Mr.  Frank  Trumbull. 

In  the  recent  history  of  railroading  and  in  the  present 
discussion  on  railway  development,  the  great  army  of 
investors  in  railway  securities  have  not  taken  a prom- 
inent part.  They  have  taken  hardly  any  part,  but  on  the 
basis  of  a practical  railroad  experience  and  on  the  basis  of 
a practical  investment  experience,  I believe  it  is  in  ap- 
proaching present  problems  from  the  standpoint  of  the 
investor  that  we  are  most  likely  to  reach  a proper  solution. 

Throughout  the  country,  there  is  a great  army  of  in- 
vestors ready  to  supply  money  for  the  railroad  develop- 

4 


ment  which  the  country  so  badly  needs.  If  these 
investors  can  be  convinced  that  capital  invested  in  the 
railroads  will  be  given  proper  consideration  in  the  solving 
of  all  problems,  that  most  pressing  problem,  the  raising 
of  the  great  amount  of  money  needed  for  new  construc- 
tion and  development,  can  be  easily  solved. 

Now  let  me  get  down  to  the  present  status  of  this 
matter. 

The  Present  Conflict 

There  is  at  present  a conflict  raging  between  two 
elements  in  the  railroad  transportation  business. 

On  one  side,  are  the  directors  and  executives  of  the 
railroads.  On  the  other  side,  are  the  four  brotherhoods 
of  engineers,  firemen,  conductors  and  trainmen.  The 
brotherhoods,  400,000  strong,  united  and  alert,  say  with 
one  voice,  “We  must  have  more  pay  or  shorter  hours 
or  both  or  we’ll  strike.”  The  executives  answer,  “With  our 
restricted  rates  and  higher  cost  of  operation,  we  cannot 
grant  your  request.”  A deadlock  occurs,  the  matter  is 
appealed  to  the  President  and  he,  to  avert  a calamity, 
promises  to  grant,  through  Congress,  what  the  roads  deny. 

The  investors,  600,000  strong,  the  real  owners  of  the 
properties,  scattered  all  over  this  country,  having  an 
immense  power  vested  in  them,  unorganized,  are  unable 
to  come  forward  with  the  combined  voice  of  even  a paltry 
dozen.  They  are  uneasy.  They  chafe.  They  hesitate. 
They  ask  the  question,  “How  about  future  investments 
in  railroads  torn  by  dissension  between  executives  and 
employes?” 

They  finally  evolve  this  thought:  The  executives  of 
the  road  represent  us  and,  in  the  main,  do  it  satisfactorily; 
but,  owing  to  the  fact  that  there  is  a prejudice  against 
them  in  Congress,  in  the  Commissions,  and  in  the  mind 
of  the  public,  they  can’t,  in  their  official  capacity,  exert 
as  much  influence  in  certain  fields  as  we  could  if  we  should 
act  for  ourselves  independently.  Let  us  get  together 
and  let  us,  the  owners  of  the  roads,  show  to  Congress 
and  the  Commissions  that  political  influence  and  voting 
power  are  not  wholly  confined  to  shippers  and  the  four 
brotherhoods. 

The  investors,  in  addition  to  thinking  in  this  manner 
as  to  the  attitude  existing  between  their  railroad  execu- 
tives and  the  brotherhoods,  evolve  another  thought,  as 
follows: 

We  are  the  real  owners  of  the  railroads.  It  is  our  money 
which  is  invested,  therefore,  you,  the  brotherhoods,  are 
our  employes.  Now  what  is  the  matter?  We  are  600,000 
strong;  you  are  400,000  strong.  You  are  organized;  we 

5 


are  not.  You  have  put  one  over  on  us,  because  you  are 
organized,  but  it  is  unfair.  It  won’t  stand  the  test.  Let 
us  talk  over  our  grievances.  You  have  yours.  We 
have  ours.  We  can’t  pay  what  you  demand  unless  we 
are  helped.  Instead  of  snarling  and  quarreling  with  your 
executives,  let  us  together  find  the  solution  of  the  matter 
and,  when  we  get  what  we  ought  to  have  (and  we  ask  you 
to  help  us  get  it),  you  may  be  sure  that  we  in  turn  will 
allow  you  what  you  must  see  under  this  high  cost  of 
operation  we  cannot  grant. 

At  Cross  Purposes 

Now,  gentlemen,  you  must  see,  in  the  present  condition 
of  this  conflict  between  the  railroads  and  their  employes, 
that  they  are  working  at  cross  purposes. 

The  great  army  of  railroad  brotherhoods  have  been 
forehanded.  Upon  small  contributions  from  their  wages 
and  with  skilful  and  astute  leadership,  they  have  built 
up  a power  and  force  which  have  enabled  them  to  go 
before  the  highest  authority  in  the  land  and  demand  and 
obtain  a promise  of  increased  pay  upon  threat,  if  not 
granted,  of  closing  up  the  traffic  of  the  country. 

These  400,000  employes  of  600,000  investment  owners, 
of  our  $20,000,000,000  national  transportation  system, 
did  this.  How  did  they  get  away  with  it?  Was  it  because 
their  numerical  strength  made  them  politically  formidable? 
Is  this  big  free  country  to  be  coerced  by  such  tactics? 

And  right  here,  is  it  not  logical  to  ask  if  the  brother- 
hoods can  by  this  threat  obtain  higher  wages  why  can 
they  not  by  similar  threat  more  simply  solve  this  problem 
and  obtain  for  their  employers,  the  railroads,  higher  rates 
to  enable  them  to  pay  higher  wages? 

“It  is  well  to  have  a giant’s  strength,  but  it  is  tyrannous 
to  use  it  as  a giant.” 

Now  I submit  that  the  brotherhoods,  in  taking  the 
course  which  they  did,  committed  a great  mistake.  If  an 
employe  of  mine  comes  into  my  office  with  pistol  in  hand 
and  says  to  me,  “Mr.  Muir,  I want  you  to  raise  my  pay. 
If  you  don’t,  I will  blow  your  head  off,”  I tell  him  at 
once  to  clear  out.  But  if  he  comes  to  me  and  says,  “You 
are  making  money.  My  pay  is  not  enough  under  this 
increased  cost  of  living.  Will  you  not  raise  it?”  I 
immediately  reason  with  him  and  devise  ways  and  means 
to  satisfy  him. 

This  course  of  the  brotherhoods  will  not  stand  the 
test.  The  railroads,  under  present  conditions,  can- 
not stand  for  the  demand  of  the  brotherhoods  and 
continue  successful  operation.  If  the  brotherhoods 

6 


had  used  the  same  influence  and  force  with  the  same 
authority  in  Washington  in  presenting  the  needs  of  the 
railroads  and  gained  for  their  employers  what  they  think 
they  have  secured  for  themselves,  the  railroads  would 
to-day  be  able  to  meet  their  demands. 

The  Real  Owners 

And  where  in  this  controversy  stand  the  600,000  rail- 
way investors,  who  embody  the  great  force  that  lies 
latent  in  the  owners  of  the  railroad  property?  Nobody 
ever  hears  a peep  from  them,  and  Congress  and  the 
Commissions  simply  ignore  them  as  if  they  were  a negligible 
quantity.  That  is  not  the  way  to  carry  on  an  effective 
campaign.  Why  shouldn’t  they  appear  by  means  of 
their  own  chosen  representatives,  before  the  Newlands 
Commission  or  whatever  body  may  finally  be  appointed 
to  crystalize  conclusions  on,  this  all-important  problem? 
Why  shouldn’t  they,  as  an  organized  and  politically 
formidable  body,  bring  their  influence  to  bear  on  the  press 
and  on  the  public?  Of  course,  their  representatives 
in  the  persons  of  presidents,  legal  counsel,  etc.,  appear 
and  speak  for  them,  but  we  all  know  very  well  that 
isn’t  the  same  thing,  because  the  public  prejudice  is 
against  the  managers  of  the  railroads,  not  against  the 
stockholders  who  own  them.  It  is  of  supreme  importance 
that  the  owners  should  be  satisfied,  because  it  is  they 
who  furnish  the  funds  to  develop  the  sections  of  country 
not  now  properly  supplied  with  transportation  facilities. 
It  is  the  owners  that  Congress  and  the  Commissions 
ought  to  hear  from,  and  the  owners  are  as  dumb  as  oysters 
and  as  powerless  as  jellyfish  with  no  solidarity  or  means 
of  expression. 

And  now  The  Saturday  Evening  Post  says,  “In  the  face 
of  a billion  net  last  year,  railroad  managers  and  investors 
in  railroad  securities  are  wondering  what  the  situation  will 
be  after  the  boom,  if  public  regulation  of  railroads  is 
applied  in  as  narrow  and  jealous  a spirit  as  it  was  for  some 
years  before  the  war.  Individual  shippers  may  applaud 
when  a particular  rate  they  are  interested  in  is  cut  down. 
Farmers  here  and  there  may  be  fooled  into  thinking  that 
the  lowest  possible  freight  rate  which  does  not  throw  the 
carriers  into  actual  bankruptcy  is  to  their  interest.  But 
it  is  very  certain  that,  for  the  country  at  large,  regulation 
in  that  haggling  oppressive  spirit  does  not  pay.” 

I quote  from  the  Bible  when  I say,  “Beware  of  the 
withholding  which  leadeth  to  poverty.” 

You  have  no  doubt  seen  that  the  present  condition 
of  the  railroads  has  been  likened  to  a man  suffering  from 
hardening  of  the  arteries.  This  is  a striking  simile,  but 
I cannot  fully  subscribe  to  it.  Hardening  of  the  arteries 

7 


means  age,  decay  and  approaching  dissolution.  This  is 
not  the  case  with  this  country.  We  are  young,  vigorous 
and  have  plenty  of  rich  virgin  sections  yet  to  open  and 
cultivate.  But  we  are  hampered  and  hemmed  in  by  the 
wants  of  this  growing  nation.  We  need  blood  to  pulsate 
through  these  arteries.  The  thousands  and  tens  of 
thousands  of  small  investors  stand  ready_  to  furnish  the 
means  to  inject  blood  in  the  shape  of  rails,  ties,  rolling 
stock,  terminal  facilities,  to  develop  these  new  fields.  But 
they  hesitate  and  fight  shy  of  new  propositions  where,  by 
the  lesson  of  last  summer,  they  see  that  their  employes’ 
demands  are  satisfied  and  taken  out  of  the  earnings  of 
the  railroads  by  the  Government  and  their  own  right's 
for  proper  compensation  are  ignored. 

Purpose  of  the  League 

Now,  the  Railway  Investors’  League  has  been  organized 
to  consolidate,  for  protective  action,  that  immense  power 
and  influence  possessed,  but  heretofore  unused,  by  hun- 
dreds of  thousands  of  unorganized  investors. _ 

The  League  is  neither  anti-labor  nor  political.  Its  aim 
is  to  secure  fair  play  alike  from  railroad  managers,  rail- 
road workers,  railroad  regulatory  bodies  and  political 
parties.  It  will  oppose  unfair  tactics,  whether  attempted  . 
by  federal  or  state  government  bodies,  by  railroad  manage- 
ments or  railroad  employes.  It  is  “anti”  nothing  save  un- 
just practices  from  above  or  below,  from  without  or  within. 

This  is  The  Railway  Investors’  League  which  is  now 
growing  like  a young  giant  and  to  which  we  want  every 
man  or  woman  who  owns  one  share  of  stock  or  one 
thousand,  one  hundred  dollar  bond  or  thousands,  to  belong 
and  to  support  this  immense  power  for  fair  play  -fair  play 
for  owners  and  employes,  for  shippers,  for  the  public 
and  for  the  country. 

Mr.  Paul  Mack  Whelan,  the  secretary  of  the  League,  is 
here.  He  will  furnish  the  platform  of  the  League,  and, 
if  you  are  in  sympathy  and  accord  with  its  object  and 
purpose,  enroll  yourself  now.  More  especially  do  I in- 
vite co-operation  and  enrollment  from  the  members  of  the 
brotherhoods.  There  is  not  one  idea  or  sentiment  in  The 
Railway  Investors’  League  incompatible  with  the  brother- 
hoods’ desire  to  obtain  fair  play  from  their  corporations 
and  for  their  corporations.  Instead  of  being  400,000  and 
600,000,  let  us  make  it  a million,  combined  to  assert, 
maintain  and  defend  our  rights. 

Brothers  of  the  brotherhoods,  are  you  with  us?  If  so, 
come  forward  now  and  act  jointly  with  us. 

JOHN  MUIR,  Chairman, 

Railway  Investors’  League. 


December  14,  1916. 


8 


